Registered capital is the total amount subscribed by the shareholders and registered for a Chinese company. It is not necessarily the same as cash already paid into the company. Under the Company Law effective from 1 July 2024, shareholders of a newly established limited liability company generally must pay their subscribed contributions within five years after establishment, unless another law, administrative regulation or State Council decision provides a different rule.
The number should be commercially supportable, not merely impressive. Shareholders need a contribution schedule that matches the company’s funding needs, approved business, banking path and ability to document each payment or non-cash contribution. Companies established before July 2024 must separately assess the State Council transition rules rather than simply applying the new-company timetable.
Direct answer
Registered capital is a legally recorded shareholder funding commitment. For a limited liability company, Article 47 of the current Company Law defines it as the total subscribed contributions registered with the company registration authority. The articles of association must state each shareholder’s contribution amount, form and date.
For companies established under the revised law, the default rule is that all subscribed contributions must be paid within five years after company establishment. Sector-specific laws, administrative regulations or State Council decisions may impose different paid-in, minimum-capital or timing requirements.
The practical task is therefore to choose and document a defensible amount and timetable, then keep the articles, public disclosures, shareholder register, contribution certificates, bank records and accounting evidence consistent.
Registered, subscribed and paid-in capital
These concepts should not be collapsed:
- Registered capital is the total subscribed amount registered for the company.
- Subscribed contribution is the amount a shareholder commits to contribute under the articles.
- Paid-in contribution is the amount or property actually contributed and properly transferred to the company.
A business licence showing registered capital does not by itself establish that the full amount has been paid. Due diligence should compare the public record and articles with payment evidence, accounting records, contribution certificates and the shareholder register.
The five-year rule for new limited liability companies
Article 47 provides that shareholders must pay their subscribed contributions according to the articles within five years after the company is established. Article 49 requires shareholders to contribute fully and on time. Cash must be deposited into the company’s bank account; property used as a non-cash contribution must be transferred according to law.
The five-year period is an outer legal framework, not a recommendation to defer all funding until the end. The articles can require earlier or staged payments. The schedule should reflect when the business will need premises, people, inventory, technology, regulatory approvals and working capital.
Transition for companies established before July 2024
The State Council’s registered-capital provisions govern the transition for earlier companies. Where a limited liability company established before 1 July 2024 has a remaining contribution period extending more than five years from 1 July 2027, it generally must adjust that remaining period to fall within five years by 30 June 2027 and record the adjustment in its articles.
The provisions also address contribution periods or capital amounts that are obviously abnormal. Registration authorities may require adjustment after applying the prescribed assessment process. Legacy companies should review their position before the transition deadline rather than assuming an old long-stop date will remain untouched.
The analysis should identify:
- the company’s establishment date;
- each shareholder’s subscribed and paid-in amount;
- the contribution dates in the current articles;
- any already-overdue contribution;
- whether the remaining period crosses the transition threshold;
- whether the amount or schedule could appear objectively abnormal; and
- the corporate approvals, article amendments and registration steps needed for remediation.
Choosing a defensible amount
China does not apply one useful universal minimum for every limited liability company. Sector-specific requirements can still apply. The amount should be tested against:
- the business plan and expected operating costs;
- licence or tender requirements;
- contractual commitments and landlord or supplier expectations;
- the timing and source of shareholder funds;
- foreign-exchange and banking implementation for foreign shareholders;
- possible losses before break-even;
- planned financing and security; and
- exit, reduction or restructuring scenarios.
An unnecessarily high figure can create a funding obligation and liability exposure. An unrealistically low figure can leave the company underfunded and may be inconsistent with its intended activity. The correct figure is fact-specific.
Forms of contribution
Article 48 permits money and transferable, monetizable non-cash property, including physical assets, intellectual property, land-use rights, equity and claims, unless another rule prohibits the proposed asset. Non-cash property must be valued and legally transferred; it must not be materially overvalued or undervalued.
A non-cash contribution file should identify the asset, ownership, valuation basis, required consents, transfer instrument, registration evidence where applicable, accounting treatment and the date on which the company acquired the relevant right.
Governance and evidence
Article 51 requires the board to verify shareholder contributions and, if a contribution is overdue, cause the company to issue a written demand. The revised law also contains consequences for failure to contribute, including potential loss of rights after the statutory process, liability for losses, and accelerated contribution exposure in specified circumstances.
The company should maintain a capital file containing:
- the current and historical articles of association;
- shareholder resolutions and board records;
- subscription and contribution schedules;
- bank receipts and foreign-exchange records;
- valuation and transfer documents for non-cash property;
- contribution certificates and the shareholder register;
- accounting entries and audit support; and
- public-disclosure and registration evidence.
Public disclosure
Article 40 requires companies to disclose shareholder subscribed and paid-in amounts, contribution forms and dates through the National Enterprise Credit Information Publicity System, together with other specified information. The company is responsible for ensuring that published information is true, accurate and complete.
SAMR’s Company Registration Management Measures, effective from 10 February 2025, further implement registration and disclosure rules. A change process should therefore update the corporate instruments, registry filings and public disclosure as one controlled workstream.
Capital increases and reductions
An increase is not merely an internal promise. The company needs the necessary corporate approval, amended articles, a contribution schedule and registration/disclosure steps. Current SAMR measures apply a five-year contribution framework to newly subscribed capital in a limited liability company following an increase.
A reduction requires separate creditor and corporate analysis. It can affect lenders, suppliers, government incentives, licences and shareholder economics. It should not be used as a clerical shortcut for an unsuitable historic capital figure.
Transaction and creditor risks
A buyer of shares should reconstruct the full contribution history, not rely only on the current business licence. The diligence file should identify overdue amounts, transfer history, non-cash assets, prior demands, creditor pressure and the funding obligation the buyer will inherit economically or legally.
Creditors and companies may have remedies relating to unpaid contributions. Transaction documents should distinguish a valid future obligation from an existing breach and allocate responsibility through price, conditions, covenants, specific indemnities or security as appropriate.
Common mistakes
- Treating registered capital as proof of cash in the bank.
- Selecting a large number for appearance without a funding model.
- Assuming every company can use the same five-year schedule.
- Ignoring sector-specific paid-in or minimum-capital rules.
- Missing the transition analysis for a pre-July-2024 company.
- Contributing non-cash property without completing valuation and legal transfer.
- Allowing the articles, public disclosure and accounting records to diverge.
- Treating capital reduction as a filing-only exercise.
Planning checklist
Before registration or a capital change, confirm:
- What is the company’s five-year operating funding requirement?
- Does a sector rule impose a different minimum, paid-in requirement or timing?
- How much will each shareholder subscribe, in what form and on what date?
- Can foreign shareholders complete the required banking and foreign-exchange steps on time?
- How will each payment or property transfer be evidenced?
- Which board process will monitor contributions and issue demands if needed?
- Are the articles, register, certificates, accounting records and public disclosures aligned?
- For a legacy company, what transition adjustment is required before 30 June 2027?
- Do financing, incentive or commercial contracts constrain an increase or reduction?
- How will unpaid capital affect a future share transfer, insolvency or creditor claim?
Sources
- Company Law of the PRC, 2023 revision, National People’s Congress; effective 1 July 2024.
- State Council Provisions on Implementing the Registered Capital Registration Management System, effective 1 July 2024.
- Company Registration Management Measures, State Administration for Market Regulation; effective 10 February 2025.
General legal information only; not legal advice for a specific company, investment, financing or transaction.
